How hospital and physician leaders can prevent negligent credentialing lawsuits

As more hospitals employ and contract with physicians, lawsuits holding hospitals liable for medical negligence have become more prevalent.

While each hospital has its own credentialing process, leadership teams can protect their organizations from negligent credentialing lawsuits by fully understanding the history of negligent credentialing and studying current case studies, Carol Cairns, a healthcare consultant, speaker, author, and expert witness, said during an Oct. 3 webinar hosted by Becker's Hospital Review and sponsored by the American Medical Association.

The status of negligent credentialing: What is it, and why cases are on the rise

Negligent credentialing lawsuits surface when a patient who has been injured in a hospital sues their medical provider for malpractice and the hospital for credentialing the physician.

Negligent credentialing can go by many names, including corporate negligence, negligent selection and negligent peer review. A key part of these cases is the presence of a tort, which is a civil wrong that causes a claimant harm or suffering, and results in legal liability for whoever committed the act. To prove negligence and establish liability against a hospital, four requirements must often be met: plaintiffs must prove a duty existed, a duty was breached, the breach caused a harm, and damages resulted from the breach.

In her more than four decades of legal and medical experience, Ms. Cairns has never seen as many negligent credentialing cases as she does today.

"It's like a volcanic eruption of negligent credentialing cases," she said, a change she thinks is twofold: "First, hospitals are employing or contracting with more physicians. Malpractice can occur and that can be a charge of negligent credentialing. Second, with practitioners, there's a limited amount of dollars that plaintiff attorneys can seek, but in the systems and the hospitals, there are much larger dollars to be had," she said.

Landmark cases and their precedents

The way negligent credentialing cases are handled today stems from historical changes to how lawsuits against physicians affected hospitals in the past.

"In the past, hospitals were more like workshops where independent physicians treated patients. Hospitals thought they were largely immune from lawsuits affecting physicians," Ms. Cairns said.

However, that changed with the 1965 lawsuit Darling v. Charleston Community Hospital. In that case, an 18-year-old boy sought treatment for a leg fracture. The on-call physician had not treated a fracture in three years, but was called into the hospital to perform the procedure. After two weeks, the patient was transferred and complications led to his leg being amputated. The family sued, and a jury awarded $150,000 to the plaintiff, with 80 percent coming from the hospital and 20 percent from the physician.

"This ended hospitals' perceived immunity and was a legally enforceable standard that said hospitals are independently responsible for monitoring, supervising and controlling care where necessary to protect the patient," Ms. Cairns said.

Another landmark negligent credentialing case, Gonzales v. Nork, came to a similar conclusion in 1973. In that ruling, the judge's conclusion that the hospital "knew or should have known" the physician wasn't safe to credential is language negligence cases still reference today.

Recent case studies and lessons learned

Hospital leaders and medical staff can learn from the past, but present negligent credentialing lawsuits also act as case studies on how to avoid similar legal action at their organizations.

Ms. Cairns shared a case study about a woman who suffered a knee injury out of her home state. She sought emergency care, was stabilized, and requested to be discharged so she could seek care in her home state. Unfortunately, the woman did not promptly seek additional treatment, and complications led to the woman requiring an above-the-knee amputation. The patient filed a malpractice suit against the out-of-state hospital and physician. Ultimately, the physician settled, and the hospital was found not guilty.

Documentation was key to the hospital's victory, Ms. Cairns said. The hospital produced comprehensive, up-to-date bylaws and policies that outlined its high standard of credentialing, privileging and peer review processes.

Another case Ms. Cairns shared highlighted the importance of not confusing medical staff membership and privileges with employment and contractual arrangements. Other actions medical staff leaders and professionals can take to prevent negligent credentialing lawsuits include knowing state licensing regulations, adhering to state regulations and medical governance documents, and seeking knowledgeable legal advice.

"Follow your governance documents. Make sure they're current. Make sure all the governance documents — the privilege forms, the applications, the reference letters — are state of the art," Ms. Cairns advised. "Make sure leaders of the medical staff and affairs and your governing body are educated. Seek counsel that shows you how to get something done."